The most recent statistics, written about in the Atlantic (www.theatlantic.com), about America's foreclosure market reveal that repossessed homes will probably hit one million before 2010 is over, with the worst-hit areas states being Nevada, California, Florida, and Arizona.
Foreclosures on home listings are expected to reach about one out of every 138 households as homeowners continue to lose thier jobs or remain unemployed. Many homeowners were also denied refinancing since their homes are worth less that what they owe on their mortgages. The government's effort to prevent foreclosures did make a small impact, giving over 200,000 homeowners (just over 20% of troubled borrowers) modifications of their loans.
How to homeowners deal with foreclosures? According to a new poll sponsored by RealtyTrac and Trulia.com, the present-day foreclosures are caused by unemployment, not the same subprime mortgage products that started the foreclosure trend. Right now unemployed borrowers now account for about one out of five mortgages in the U.S. Also according to the poll, only about one percent of those questioned answered that their first choice would be to walk away from their homes. However, there are some homeowners that choose to walk away, called strategic default, even when they can still afford the mortgage payments.
The flipside of the amount of foreclosures on home is the people who want to buy them. It seems that there are not enough buyers to accommodate all of the foreclosures. And the buyers who have the finances and the means, are wary of foreclosures. The poll also showed that construction is suffering the most from the collapse of the housing market the recession that came soon after. Renovations to foreclosed homes could help this industry a bit and some good statistics are that over 90 percent of those questioned responded that they would be willing to invest in home repairs and improvements on a purchased foreclosure. This offers hope for the construction industry.
As Rick Sharga, RealtyTrac Senior Vice President, is quick to point out, the forecloses homes that we see on the market are by far not the only ones existing. There are many that the banks are slowly trickling into the real estate market so as not to flood it and make prices go even lower. These "hidden foreclosures" which is termed the "shadow inventory" is almost three times more than what we see on the market, according to Sharga.
What do all of these statistics tell us besides the fact that foreclosures on home property are going to be around for a while, as we already knew? Sharga explains after having performed a detailed analysis on the market that foreclosures will reach another high in 2011 and will probably not be back to "normal until two years later. House prices will also rise very little, if they even rise at all, in the next two or three years.